Change in land use profoundly impacts ecological development, posing a consequential threat to the sustainable progress of society, civilization, economy, and the environment. Based on high-precision land use data from 2000 to 2020, this study delves into the spatiotemporal evolution of land use and ecosystem service value (ESV) in the Lhasa River Basin. By employing PLUS models and geographic detectors, the driving factors of land use alterations and the spatial differentiation of ESV were explored. The findings reveal that (1) The predominant land use in the Lhasa River Basin was grassland from 2000 to 2020, constituting 85.23% of the total basin area, indicating a trend of grassland reduction and expansion of other land types; specifically, the grasslands decreased by 2.45%, while construction land, water area, and forest land expanded by 199.72%, 44.64%, and 21.97%, respectively. (2) The change in land use within the watershed was intricately influenced by factors such as altitude, annual average ground temperature, and distance from lakes and reservoirs. Altitude, in particular, exhibited a substantial contribution to the expansion of cultivated, forest, water bodies, and construction lands, with respective values of 0.18, 0.11, 0.28, and 0.13. Slope and annual average ground temperature contributed significantly to changes in grass and unused lands, registering values of 0.14 and 0.15, respectively. (3) From 2000 to 2020, the overall ESV of the watershed increased by 1.14% (1.496 billion yuan). Grassland and climate regulation were the land use and ecosystem service types with the most prominent respective contributions of 87.13% and 25.50% to the ESV. (4) Furthermore, the ESV within the watershed exhibited substantial spatial differentiation, influenced by factors including NDVI, altitude, annual average wind speed, and annual average temperature. The explanatory power of NDVI reached a notable 0.46, and the interaction between any two factors accentuated ESV differentiation. These research outcomes provide valuable scientific insights for guiding the spatial planning and ecological and civilizational development of the Lhasa River Basin and analogous regions.